The Myth of the Stakeholder: Part 2
In this letter, the second part of my critique of the “stakeholder myth” forwarded by Christine Desan and other chartalist writers as a replacement for the “myth of barter,” we are headed directly into the weeds of a rather tricky issue, and one which has not, to the best of my knowledge, yet been solved by historians: the monetary history of the Carolingian Empire, and the reforms of Pepin and Charlemagne more specifically. Again, what follows here is my current hypothesis and best effort to reconstruct the system, rather than a definitive solution. I suspect that I have solved it, but solutions are known to vanish in the face of inconvenient facts (Indeed — that is the whole point of this blog). I also do not, here, provide a full scholarly apparatus to demonstrate the truth of my conclusions and the steps of my reasoning: that will have to wait for future work in a more formal venue. It is worth pointing out that my conclusions here rely on well over two hundred years of painstaking work of scholars who have collected, catalogued, and speculated about the coins: if I am lucky enough to have finally “figured it out,” this was only because generations before me did the legwork. Here, however, I want to acknowledge that I have relied especially on data and speculations provided by Peter Spufford and Harry Miskimin, although I depart in places from their interpretations.
Last time, we traced the aftermath of the collapse of the late Roman monetary system in what was, essentially, the Anglo-Frisian zone, or the zone of commercial and cultural exchange centered on the southern part of the North Sea. There, we saw that the gold triens vanished into a unit of account known as the gold scilling, composed theoretically of 20 barley grains of gold, which was instantiated as a coin by 20 silver sceattas — each of which, therefore, represented the value in silver of a notional grain of gold. Now, our story will take us southwards, to the former Roman Gaul and its successor polities ruled by the Merovingian and Carolingian dynasties. Here, the pale gold debased triens seems to have transitioned somewhat seamlessly into the denier or “new denarius,” the silver coin that would be the center of the medieval coinage for hundreds of years to follow (and is the reason that English pence are written with the abbreviation d.). The earliest types of this coin are indistinguishable from the triens except in their metal: they have the same type, and seem to have first been minted at the same weight of 20 barley grains or 1.3g.
This standard, however, did not last long: the silver triens or proto-deniers demonstrate a collapse of weight standards, slowly at first, and then accelerating sharply in the midst of the Umayyad invasion of the 730s. As Spufford observes, the modal weights of the extant coins are clustered around divisions of the Roman pound. Remember that the “Frankish” or late triens was minted, as the third part of the solidus, on a standard of 21 to the Roman ounce. The light deniers of this period are readily intelligible as having been minted at 22, 23, 24, to the ounce, and so on, with the lightest specimens falling at about a round gram, or about 1/27th part of the Roman ounce. One important thing to note here is that this lightening of the denier in terms of divisions of the ounce of 420 barley grains into numbers of deniers higher than 21 took the individual denier off the barley standard: while batches of coins would have been calibrated to round number weight measurements, individual coins could not have been with the result that there would have been not only a decrease in the mean weight of the coins, but also an increase in their variance.
It seems that, after the victory of Charles Martel at Tours in 732, there was an effort to restore the standard to its former rating, possibly initiated by his son Pepin the Short as Mayor of the Palace and then continued after his coronation as the first Carolingian king. We know that in 754/5, Pepin proclaimed that his deniers would henceforth be minted at a standard of 22 sous to the pound (264 deniers) rather than 24 sous (288 deniers). If the pound in question can be identified with the Roman pound of about 327g, then this would imply that Pepin was seeking to raise his coins to an official standard of about 1.24g. However, as Spufford notes, it is “by no means certain” that Pepin’s pound was the Roman pound, and “surviving pieces suggest that a standard weight of 1.3 grams was aimed at” (40, n.2). This would make sense, because it would imply that Pepin was seeking to restore his coins to the old standard of the silver triens at 20 barley grains, which by that time would have been seen as the old and proper standard. We can thus take as a fixed point of reference that, upon the accession of Pepin as king, he set the standard of his coinage at a rate of 22 sous of 12 deniers of 20 barley grains each, to the pound. This means that the pound in question was a newer and slightly higher one of 5280 barley grains (a little over 342g). It is easy, therefore, to see what happened: at some point, a new pound was constructed that was equivalent to an old Roman pound (5040 barley grains) plus one sous of 12 silver triens or deniers (240 barley grains). What we see here is probably the very first origin of the “King’s Shilling.” Why was this pound altered, and when, and why by this amount?
The answer is to be found in the transition between the gold era and the silver one, and the concomitant transition between two regimes of seignorage: one in which seignorage was charged in terms of quality, to one in which seignorage was charged in terms of weight. The old pale gold triens had been of the former type: one would have brought a pound of metal to the mint, and received back a pound of coins without any loss in weight (or conceivably with some increase), but the mint would have taken its cut by keeping some of the gold and replacing it with silver. In the new regime, however, in which gold had vanished entirely, this was no longer possible in the same way. Either the pure silver coins themselves would also have to be debased (a path which does not seem to have been taken here, but would become a common feature of the later medieval period) or seignorage would have to be extracted in a different way, in terms of weight rather than in terms of quality. As we saw in the “King’s Shilling” however, the mint ceases to function if its operation represents an absolute loss to the party supplying the metal: if they are to lose something intrinsic in the weight of their coins, they must receive something back in nominal terms. In the case of pale gold triens, this surplus of nominal value would have been located in fact that the coin was, legally and theoretically, more pure than it was in reality. Obviously, then, if seignorage was to be extracted from the production of highly fine silver coins, then this could only happen if the coins were, legally and theoretically, heavier than they were in reality. (The system of scillings and sceats we examined last time represents a third, alternative path: in that system, the legal valuation of silver in gold terms would have been higher than the market value of silver, such that silver was legally overvalued. The details of this will, for the moment, be left as an exercise to the reader.) With this in mind, we will be able to readily see exactly what happened, and how the medieval European unit of account (1 pound = 20 shillings = 240 pence) evolved out of the late antique standard of 21 triens to the Roman ounce, as a result of the terminal crisis of the gold era.
Put yourself in the shoes of a Merovingian mint master, living through the final gasps of the gold era and thus the collapse of revenues from the mint. You have been minting the Frankish triens at 20 barley grains, which is supposed to be of gold but is now made entirely from silver. You have therefore hit the technical lower bound on your ability to swap nominal for intrinsic value by means of the debasement of quality. What to do? The answer they found lies in the convenient fact that, at 21 to the ounce, there are 252 silver triens to a Roman pound, or the weight of 21 sous. Thus, it would be possible to continue minting the same coins at the same standard, but to declare that 20 sous or 240 of these deniers, rather than 252, should be legally equivalent in value to a weight-pound of silver. Thus, the actual weight of the denier would be 20 barley grains, as was the old triens, but its theoretical weight would now be 21 barley grains, since it was legally equivalent to 1/240th of a pound of 5040 barley grains. Thus, by swapping around the factors of 20 and 21 they inherited in their standard, they could produce a system in which the silver coin could be nominally overvalued in terms of a unit of account in the same, rather than a different, metal. The “extra” twelve deniers that constituted a surplus-sous on top of the monetary pound could therefore be taken as seignorage.
At some point, whether at the same time or later, this nominal pound of a pound-plus-a-sous must have been recognized as the new intrinsic pound of 5280 barley grains, in terms of which Pepin’s commitment to mint coins of 1.3g at 22 sous to the pound becomes intelligible. Spufford notes that, of this 22 sous, 1 sous was to go to the moneyer, although he is not sure if this figure is inclusive of payments to the king (whether, that is, it represents seignorage and brassage, or simply brassage). I suspect that this number is inclusive of seignorage, that the king and the moneyer split the 12 deniers, and that the supplier of the bullion therefore received back 252 of them, thus deriving a nominal sous of profit from their delivery to the mint of an intrinsic pound of silver. (If Miskimin is correct, however, that the rate of seignorage on Carolingian coins was 10 percent, then it is possible — if, to my mind, less likely — that net brassage and seignorage was 2 sous, and the exchange at the mint window occurred at parity. ) If later history is any guide, the most likely arrangement between king and moneyer was for the moneyer to pay the king up front for his share of the profits (in other words, the moneyer purchased a farm on the mint) and thus took, on his own book, a speculative position in the volume of minting activity. This, however, must be a topic for another time, and for another period in which the relevant documentation becomes more available to historians.
This standard of a pound of 5280 barley grains and a denier (a restored silver triens) at 22 sous the pound was bequeathed by Pepin to his son Charlemagne. In the early part of this reign, we see the English king Offa raising his penny from a standard of about 1.24g (representing either 23 sous to the pound, or 22 to the old one) to match that of his neighbors across the channel, which had recently been raised from a value below his penny (~1.19g) to one above it. Offa was surely rather put out, then, when Charlemagne raised his coins abruptly shortly thereafter. It is to this reform that we must now turn. This is a very complicated issue, and my solution to it is tentative, but I hope to show that this solution is plausible because it makes the numbers work out in a very convenient way. Charlemagne, over the course of what Miskimin has argued was in fact a two stage reform, was able to bring his monetary standard into alignment with the Islamic one, an important objective given that the military activity of the early 8th century had thrown large numbers of Umayyad coins into European circulation (thereby, as it happens, introducing to Europe the Persian technology of milled rims that characterized the new denarius). A consideration of this issue will finally allow us to see (as promised!) the importance of these Umayyad coins for the foundation of the later English monetary system.
Charlemagne accomplished this feat by changing the size of the barley grain, such that this new and probably imaginary “barley grain” would be able to interpret both the Roman pound and the Islamic dinar in whole number terms, and therefore allow Frankish silver to trade against Muslim gold at a convenient ratio. Impressively, this change in the size of the grain had the additional benefit of eliminating the pesky factor of 7 that had been introduced into the system when the Roman pound was originally interpreted in terms of barley grains in the early days of the light solidus (the VIIs, we might call them, after the numerals stamped into them to distinguish them from the earlier 6ths). We will see what Charlemagne did in a moment, but first we need to consider the structure of the Islamic system that he was confronted with. We will not dig deep into the history of this system (in no small part simply because I am not yet competent to present it, although I hope to become so later) but we must get a rough sense of it in order to appreciate Charlemagne’s achievement (and, in so doing, further dispel the myth of the stakeholder by showing that this reform was motivated by intense concern with intrinsic values and international moneys, rather than the mobilization of domestic goods and services by the “stakeholder”).
The Islamic system differs from those we have been considering so far because it was based, first of all, on a wheat grain rather than a barley or a carob, and because it descended from the Roman ounce along a different path. At some point in time (and about this, I have no idea — let me know if you do!) the Roman ounce seems to have been lowered to 15/16 of its old value, and the dinar is thus the descendent of the solidus in that it is the sixth of this new, lighter ounce. Therefore, the Islamic dinar and the Frankish solidus or VIIs are in fact, siblings: both of them descended from a lightening of the solidus, but by different means: one by a lightening of the ounce itself, and the other by an alteration of its internal divisions. The result of this diverging history of the Roman ounce and its fractions is that the dinar (at 4.25g) sits rather uneasily about halfway between the new (3.89g) and the old (4.54g) solidus derived from the original, heavy roman ounce, without being easily expressible in itself (at ~65.6 barley grains) or as a fraction of the heavy ounce (equal by weight to about 6.4 dinars).
Charlemagne’s solution was to reinterpret the old Roman pound according to a new, slightly lighter, barley grain, which may either have been purely notional, or a convenient product of a difference in climate between the 8th century and the late Roman period which actually reduced the real barley grain in size. (At this point, I need to give a shout out to my friend Kieran Latty, with whom I have engaged in a lengthy correspondence on the topic of historical weights and measures. It is his view, after a review of the paleobotanical evidence, that it is often difficult or impossible to reconcile nominal grains or other plant-units with the actually existing plants. It seems, rather, that once a system of weights is created, the grain is derived from the mina or the pound, rather than the other way around, leading to a tendency for the nominal grain to become detached from any relation it may have once had to a real one, including as a result of dislocations due to reforms of the larger unit itself.)
At any rate, Charlemagne redefined the barley grain such that 64 of the new grains should be equal in weight to 63 of the old ones (this is Miskimin’s light grain of ~0.0637g, although my model currently implies it at closer to .0638g). This tiny adjustment of the basic unit of weight accomplished two major goals at a stroke: first, it made the dinar intelligible at a weight of 66 2/3 grains, such that three of them would weigh 200 grains on the nose. Second, it eliminated the inconvenient factor of 7 by redefining 63 (3^2*7) as 64 (2^6). The result was a new interpretation of the Roman pound as weighing 5120 rather than 5040, or as 2^10*5 rather than 2^4*3^2*5*7. This new unit, the Roman pound divided into 5120 grains, we will call the “mark,” which was divided by 8ths into heavy ounces of 640 grains, or about 40.8g. There was then only one remaining problem, which was that Charlemagne had eliminated factors of 3 from the mark entirely, and thus could not easily take advantage of the identity of 3 dinars with 200 grains. This explains the other half of his change: the replacement of this “mark” of 8 ounces with a heavy mark of 9 ounces, i.e. 5760 grains. On this standard, a theoretical denier at 20 sous to the pound would be 24 grains, or about 1.53g, while the coined denier at 22 sous to the pound would weight about 1.39g, almost 2 grains higher than the value of the late denier of Pepin to which Offa had recently raised his penny. If we can assume that 6 dinar were supposed to be equal in value to a heavy mark, this would imply a bimetallic ratio of 72/5 or 14.4:1, with the result that the denier would trade against the dinar at exactly forty to one: 400/6 grains gold * 72 silver / 5 gold = 40 * 24 grains silver. At a stroke, Charlemagne had not only made it possible for his silver to trade against Islamic gold, but had also rationalized his own internal measurements.
That there was a second reform after this one, therefore, was almost certainly a result of the fact that this system, as convenient as it was, had rated gold too highly and thus valued his own silver at too low of a value (edit 1/16/21: I believe this may have been mistaken. I will present a revised theory in my next letter). Whether this was already true at the time of the reform, or whether it became so later, is a topic for future research. Regardless, the next and final phase of the reform increased the heavy mark and the denier by a factor of 4/3, with two results: the bimetallic ratio was lowered to 64/5 or 12.8:1, with the result of making the exchange between deniers and dinars slightly more complicated, at a ratio of 80:3. That the denier-dinar became slightly less rational at the expense of the lower bimetallic ratio indicates that this latter result was the motivation for the change: in his second reform, Charlemagne raised the notional value of his silver in terms of the gold dinar, thus increasing the degree of their overvaluation. The result was the pound of Charlemagne: 7680 grains or ~489.9g, with its twelfth (the ounce of 640 grains), its twentieth (the sous or shilling of 384 grains), a theoretical denier at 12 to the sous, 20 to the ounce, and 240 to the pound (32 grains or ~2.04g, the weight of the “best coins”), and a coined denier at 22 sous to the pound (~19.1 grains or ~1.86g, closer to the center of the empirical distribution).
As we can see, this series of reforms, which was surely the outcome of no small puzzlement and administrative effort on the part of those carrying it out, was intensely motivated not only to rationalize the internal consistency of the domestic monetary system, but also to harmonize it with the given facts of world money and make monetary exchanges in the realm of international commerce more readily calculable. Next time, we will turn to England, and observe the way that the evolution of the monetary system in that country responded not only to the Islamic world, but to Charlemagne’s response to the Islamic world as well. Let me conclude by saying that if any reader can make it this far and find the myth of the stakeholder remotely plausible, I will be truly astounded. It is clear from the evidence that monetary reformers were overwhelmingly motivated by foreign, as well as domestic, relationships and policy goals, and this is a fact that is fundamentally incompatible with the stakeholder story as it is presented in the work of Desan and others.
Stay tuned, intrepid numismatists. -CD
REFERENCES:
Miskimin, Harry A. “Two Reforms of Charlemagne? Weights and Measures in the Middle Ages.” Economic History Review 20, no. 1 (April 1967): 35–52.
Spufford, Peter. Money and Its Use in Medieval Europe. Cambridge: Cambridge University Press, 1988.